Details Title: AP Macro Description: Final Total Flash Cards: 81 Created: 01/29/2009 17:29:07		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Economics Flashcards
Cards in this set: Term opportunity cost Definition value of what must be given up because of your decision Term externalities Definition social costs that affect parties outside of the economic transactions Term infromation asymmetry Definition one party knows more info than the other about the product they're selling Term gross domestic product (GDP) Definition money value of all that the economy produces Term nominal Definition terms not adjusted for inflation Term labor productivity Definition amount of product an average worker turns out ina given aount of time Term transfer payments Definition sums of money that certain individuals revieve as outright grants from the government than as payments for services rendered Term mixed economy Definition economy with some public influence over the workings of free markets Term Traditional, command, market Definition 3 types of economies Term "benefit principle" of taxation Definition those who benefit froma tax should pay it Term "ability to pay" principle of taxation Definition those who can afford to pay a tax should pay it Term proportional taxation Definition everyone pays the same % of their income with this tax Term progressive taxation Definition % taxed increases as income increases Term regressive taxation Definition % taxed decreases as income increases Term scarcity Definition limited resources Term production possibilities frontier Definition shows the possible combos of various goods that a producer can turn out given available resources Term principle of increasing costs Definition as the production of a good expans, the opportunity cost of prodcing another unit generally increases Term capital good Definition item used to produce other goods and services in the future Term allocation of resources Definition society's decisions on how to divide its scarce input resources among the different outputs Term division of labor Definition specializeing a task by breaking it up into smaller tasks, which raises efficiency and productivity Term comparative advantage Definition what one country may have over another if it produces that good less infecciently as compared with the other Term market system Definition form of economic organization in which resource allocation decisions are left to independent producers and consumers acting in their own best interests without central direction Term index # Definition cost of market basket/cost of MB Base Yearx100 Term Price Definition Changes the quantity demanded Term Subsitute? Stock up? Large % of income? Definition Three Elasticity questions Term quantity demanded Definition number of goods consumers demand over a specified time Term quantity supplied Definition number of units that sellers wnat to sell over a specific time Term supply schedules Definition table showing how quantity supplied changes as price does Term Future expectations Productivity of workforce Technology progress Change in Cost of Inputs Change in # of Suppliers Gvt Regulations Taxes Related Progress Definition 8 Factors that Change Supply Term Black-market activity Non-market activity "Bads" are counted as well as "goods" Externalities Imports Used Goods Intermediaries Stocks Definition 8 Factors that aren't counted in GDP Term Clynical Definition unemployment vicitm of the economy beyond his control (Stock Market Crash) Term Structural Definition unemployment that lacks necessary skils, become obsolete (new technology, lose limbs) Term Frictional Definition result of personal choice (alcoholic, partier) Term purchasing power Definition volume of goods and services a given sum of money will buy Term real rate of interest Definition % increase in purchasing power that the borrower pays to the lender for the privelage of borrowing Term Classical Economists Definition economists that believe in laissez-faire (leave market to correct unemployment), workers will seek retraining, workers will be mobile and move to places where labor is demanded Term market basket Definition all the things that the economists put together that people buy in order to measure inflation Term price index Definition value used to adjust nominal to real figures Term Consumer expenditure Definition Factor of NI that makes most up most of total spending Term consumption function Definition relationship between total consumer expenditures and total DI in the economy, holding all other determinants of consumer spending constant Term marginal propensity to consume (MPC) Definition ratio of changes in consumption realtions changes in DI that produce change in consumption Term MPC Definition change in C/change in DI Term consumption function Definition consumer spending=MPCxincome+autonomous consumption Term autonomous consumption Definition how much you spend when you don't earn anything Term autonomous change in spending Definition change in spending not due to change in income Term induced change in spending Definition change in spending as a direct result of a change in income Term multiplier Definition 1/1-MPC Term multiplier Definition how many times an autonomous change in spending will be multiplied in order to determine the change in equilibrium income Term paradox of thrift Definition if we all collectively try to save more money, we won't be saving more money. Term Profit Definition market price of good or service-cost of production Term self-correcting mechanism Definition forces that drive equilibrium back to full employment Term automatic stabilizer Definition feautres of economy that automatically limit recessions, but also limit expansions Term variable tax Definition tax that changes with income Term fixed tax Definition tax that does not change with income Term fiscal policy Definition gvt's plan to steer economy, using gvt spending plans or by changing gvt spending or taxation Term Discretionary policy Definition one-time short term fix policy Term Expansionary policy Definition policy that gives money to people Term Contractionary policy Definition policy that takes money from people Term balanced budget multiplier Definition when you increase gvt spending and taxes by the same amount Term Reserve Requirement Definition % of every deposit that a bank must keep in reserve so as to not allow an infinite # of money and keep money away from being worthless Term Limit to $ creation in banks Definition 1/reserve requirement Term fiat money Definition money descreed as scuh by the government with little value as a commodity Term monetary policy Definition the fed resrve banks plan to steer the economy by manipulating the money supply and interest rates Term liquidity Definition how easily an asset can be converted into goods and services Term interest rate Definition how much bond will pay-how much is paid for the bond/how much is paid for the bond Term federal funds rate Definition the rate at which banks lend money to each other Term interest-sensitive consumption Definition anything that you need to loan out money for Term crowding in Definition when gvt deficits encourage investors to spend Term crowding out Definition when persistant gvt deficits discourage investment Term monetizing the deficit Definition fed reserve bank buys gvt debt in the face of persistant deficits, presrving space for investors and creates infaltion Term velocity Definition the number of times the average dollar moves in a given amount of time Term equation of exchange Definition MxV=nominal GDP Term quantity theory of $ Definition if velocity is constant then we may very easily manipulate the nominal GDP by changing the M Term Monetarists concept Definition even if V is constant, if it changes in predictable ways, the equation of exchange may be useful Term rational expectations theory Definition means that economists know everything they can about the economy, means even SRAS is vertical Term quota Definition a legal limit on the quantity of product traded across borders Term appreciation Definition when one currency becomes more expeensive in terms than another Term purchasing power parity Definition Same product should cost the same amount Term current account Definition payment for a good, service, interest payment or foreign aid Term capital account Definition payment for stocks, bonds, bank accounts or land Term strucutral deficit Definition deficit that occurs at full employment